Viet Nam Prosperity Bank comes out on top with a 35.02 per cent increase in terms of asset growth, in the Top 100 ASEAN banks ranking. — File Photo

HA NOI (Biz Hub) — Viet Nam's lenders are gathering speed, posting the second-highest growth by country in this year's ranking of the top 100 banks in the Association of Southeast Asian Nations (ASEAN).

Global financial affairs magazine The Banker of news organisation The Financial Times made the announcement in an online report this month.

The largest increase in the ranking goes to Cambodia, which grew by 30.4 per cent, although it has only one lender – Acleda Bank – recognised on the list. Cambodia also accounts for only 0.1 per cent of the total assets in the ranking, down from 0.19 per cent the year before.

Vietnamese banks – 19 of which made the ranking – grew their assets by the second-highest amount, 15.66 per cent, and although they still contribute a relatively small share of the total assets in the ranking, 7.46 per cent, they are up from 6.21 per cent in the previous year.

The ranking remains dominated by Malaysia, Singapore and Thailand, which jointly hold nearly three-quarters of the total assets.

However, growth does not necessarily translate into profitability, the report said.

With an aggregate return on assets (ROA) of 0.8 per cent and return on capital (ROC) of 12.19 per cent, Viet Nam is placed at the tail-end of the ASEAN ranking for returns.

Instead, as has often been the case in the past, the champion in that category is Indonesia, which boasts an ROA of 2.7 per cent and ROC of 25.31 per cent.

Viet Nam's banks stood out in terms of asset growth, with Viet Nam Prosperity Bank coming out on top with a 35.02 per cent increase, followed by local competitors Sai Gon Commercial Bank and Shinhan Bank Viet Nam, which expanded by 34.22 per cent and 33.32 per cent, respectively.

The country's banks look to be poised to continue this rise. In addition to robust growth and stability, banking penetration remains among the lowest in the region. Only 30.86 per cent of the population aged 15 or over had a bank account in 2014 in a country of 91 million people.

However, as Vietnamese banks expanded their operations, they did not raise capital at a corresponding pace. Vietnamese banks registered a meagre 4.54 per cent uptick in Tier 1 capital, the lowest ranking among the countries measured.

Although the local banks are among the least profitable in the ranking, the situation is improving, with Viet Nam showing a six per cent increase in pre-tax profits, a larger hike than for any other country except Singapore, where profits increased by 10.91 per cent.

Another notable growth story comes from the Philippines, which showed the largest asset growth in last year's ranking. Local balance sheets grew by an impressive 13.59 per cent, the highest after Viet Nam and Cambodia, but more slowly than the year before when the country's banks recorded a 21.26 per cent expansion.

East West Banking Corp and Land Bank Philippines contributed the best performances, with their assets growing by 31.7 per cent and 23.21 per cent, respectively. However, as in the case of Việt Nam, asset growth did not mean a major increase in the capital base, as the aggregate Tier 1 capital growth by Filipino banks amounted to 6.53 per cent.

Indonesia's institutions dominate the returns tables, with Bank Rakyat Indonesia boasting the highest ROA and ROC in the ranking, at 3.85 per cent and 37.58 per cent, respectively. Bank of Central Asia followed on its heels, coming second for both ROA and ROC, with 3.75 per cent and 32.22 per cent, respectively.

Overall, six of the top 10 banks for the highest ROA and five of the top 10 banks for the highest ROC are Indonesian.

Indonesian lenders managed these high profits while simultaneously posting the highest Tier 1 capital increase in the ranking. For all Indonesian banks in the ranking, Tier 1 capital grew by 11.93 per cent, more than in any other country bar Cambodia, where the single lender, Acleda Bank, increased its capital base by 22.29 per cent.

Still, "Viet Nam is on its way to becoming a heavyweight presence in Southeast Asia, with the top ranking for asset growth," The Banker's data editor Matthew Karwacki wrote in the report. — VNS